If you’re new to the world of cryptos, and want to learn how to be a cryptocurrency trader, then this quick guide is for you.
Cryptocurrencies today are now the big thing. A new breed of trader is emerging as the digital currency market continues to grow at an unprecedented rate.
They’re the people who recognize cryptocurrency trading as the next big thing, either because they see a long-term investment opportunity in it or because they want to make money.
It doesn’t matter if you’re a novice or an expert in trading-everyone can take advantage of these steps to become a successful crypto trader.
Steps On How to Be A Cryptocurrency Trader
Understand how cryptocurrency trading works.
1. Understand how cryptocurrency trading works
Before diving too deep into any project or endeavor, it’s important to understand the essentials first. In cryptocurrency, the basics in Nigeria include:
- Knowing how cryptocurrencies work (networked digital currencies).
- Understanding blockchain technology (consensus-based distributed ledger).
- Being aware of cryptographic hash functions (the process behind digital encryption).
In the case of learning how to become a cryptocurrency trader, it’s vital first to understand what a cryptocurrency exchange is, how it works, and how you can take advantage of its features.
Once you’re more familiar with cryptocurrency exchanges’ core functions and principles, go ahead and compare different exchanges.
This will help you select your personal favorite and make head-to-head comparisons to see which ones suit your needs best.
2. Learn what makes a good cryptocurrency trader
There’s no easy way to become a successful crypto trader. Community leaders, such as those who run popular cryptocurrency trading groups, realize that any trader can make mistakes.
Those traders who have been around for some time know that one bad decision or a wrong prediction can severely affect their careers as professional traders. What makes a good cryptocurrency trader depends on what their goals are.
The cryptocurrency market moves very quickly, and just because something worked yesterday or several months ago doesn’t mean it still works today.
To succeed as a trader, you’ll want to plan and invest in learning fundamental theories behind trading through books or online guides that are backed by reliable sources.
For example, if someone is primarily looking to make money, they’d want to learn only the essentials and avoid anything that will slow them down.
Related: What is a cryptocurrency wallet? – All you need to know
3. Learn the fundamentals of trading cryptocurrency
In the process of learning how to be a cryptocurrency trader, you’ll need to master the core trading principles.
Reading widely is incredibly important to successfully trading on a cryptocurrency exchange (and not just make money by making wild guesses).
For example, if you want to understand how technical analysis works, you can read an article that explains how traders can use charts effectively in predicting the future movements of certain cryptocurrencies.
As another example, if someone wants to learn about fundamental analysis and forecasting, they can easily find articles explaining why bitcoin and other cryptocurrencies will rise or fall over the next few months.
For instance, some analysts have predicted that bitcoin and other cryptocurrencies will go down in value, while others have predicted that they will go up.
The fact is that the predictions of every analyst and all of the industry professionals can vary widely, which means it’s up to you to do your research and decide for yourself which experts you want to trust.
In the end, understanding how your favorite strategies work should be one of your top priorities if you want to succeed as a trader.
Related: What is an IDO? All you need to know
4. Set Goals and Targets
Setting targets and goals helps traders have a benchmark for their work. The best way is to break your goal down into smaller parts.
For example, if your goal is dedicated mostly to becoming successful in the cryptocurrency market, you should set smaller milestones to recognize when it’s been accomplished.
For example, your first milestone might be to earn $1,000 worth of cryptocurrency. That helps you to keep yourself motivated and adds a positive mindset when it comes to trading.
You should also set realistic goals to start within the market. You shouldn’t aim for instant success because you won’t be prepared for the challenges that come with it. Instead, develop a long-term approach to your goals and stick with it until you see a positive result.
5. Find a trading style that suits you.
Unless you want to learn everything about technical analysis, fundamental analysis, and charting, it’s wise not to try different strategies simultaneously.
If you try the wrong strategy and lose money, you’ll be more likely to give up and start learning from a beginner’s point of view. The best way to avoid giving up is to find a strategy that will work for you.
Perhaps you’re looking for something that you can use on a daily basis without any problems. This means you won’t have to rely on forecasts, technical analysis, or research about the future development of cryptocurrencies to make money.
Instead, you can focus on more basic strategies like “Doji” and “bearish engulfing” patterns from technical analysis and look at the most recent price movements of different cryptocurrencies to make a profit.
6. Find the perfect cryptocurrency exchange for you.
As you’re learning how to become a cryptocurrency trader, you must stick to a perfect crypto exchange for you.
After mastering the basics of cryptocurrency trading and finding a strategy that works for you, it’s time to find an exchange that is reliable and provides more than just a platform for your trades.
For example, some exchanges may offer lower transaction fees or provide more security and greater customer service.
Keep in mind that your comfort level is also critical; the last thing you want is to trade on an exchange that has glitches in its system or supports technical difficulties beyond your control.
7. Understand the difference between BTC, LTC, and other exchanges
While it is essential to understand which cryptocurrencies you are trading from an exchange’s perspective, it’s equally important to understand the differences between exchanges.
Bear in mind that each cryptocurrency has its unique set of pros and cons, so make sure you know what each of these entails before deciding which one will be a better fit for you.
Also, it’s worth noting that not all exchanges support all cryptocurrencies, so you may need to use multiple exchanges as a strategy for your cryptocurrency trades.
A good example of this is Bitmex, which has very low trading fees but doesn’t allow Ethereum trades; another would be Coinbase, which offers free credit card purchases, which is great for the beginner investor but limited when it comes to altcoin trading opportunities.
8. Pick one currency and stick with it.
Learning how to become a cryptocurrency trader that is successful doesn’t necessarily mean learning how to trade all digital currencies.
You can trade many cryptocurrencies, including bitcoins, Litecoins, Dash, and Ripple. But the cryptocurrencies out there are too many for you to follow them all-some are undergoing development or changing their function entirely, and some are just straight-up scams.
When you pick a currency to trade with, pick one with a team that sticks by it and develops it regularly (such as Dash), or choose one that is at least very stable in terms of its value (such as Bitcoin). This way, your trading strategy will not fall apart due to sudden changes in the coin’s behavior.
9. Understand the difference between long, short, and leveraged trades.
Understanding how to use leverage within your cryptocurrency trading strategy can be a little tricky at first, so we’ve created an article to help explain how these work.
When it comes to trading cryptocurrency, we recommend that you avoid using leverage unless you are extremely experienced with it, or you could lose a lot of money.
10. Time your entry and exit points
For the typical crypto trader, timing is everything: if you enter a position too early, it could be gone within minutes, and vice versa if you enter too late.
The best way to mitigate these risks is to set a target price point for 1, 2, and 3 days after purchase and then plan your entry point. With this done, you can buy into the asset at the lowest possible price and then sell it at its peak.
11. Keep your eyes on the charts.
Some Crypto traders like to follow the charts because they are a quick way of checking market status, seeing patterns, and identifying entry points.
They are beneficial for day trading larger market cap coins as you can see clear support/resistance levels formed within a few minutes of their release. Although they can be somewhat overwhelming, they also offer powerful insights into market moods.
12. Avoid panic selling or buying.
If you’re going to learn how to be a cryptocurrency trader that is super smart, you should avoid panic buying or selling.
This is one of the main mistakes that traders make regularly. To succeed, you must avoid being influenced by the market and focus on your trading plan.
Even if the price seems to be falling, you should resist the urge to sell your assets for less than they are worth to preserve your capital.
This helps you develop a successful trading strategy that works for you rather than following what everyone else is doing.
In some situations, it might make sense to sell off assets before they drop in price, but it’s essential to understand why you’re doing it before doing anything rash.
You need to understand the market and your role in it. For example, a popular trading strategy is ‘contrarian trading.’ That means that you should respond to positive trends by selling off assets; this helps to fasten the decline of the trend and can result in significant profits if done properly.
Setting up a detailed strategy is something you need to do before serious trading. It will help you to be more successful and offer you a better understanding of why traders are buying or selling particular cryptocurrencies.
By doing this, you’ll be able to build up your trading plan and make good decisions on when to sell or buy assets.
How to Be a Cryptocurrency Trader (Summary Notes)
Once you’ve chosen the perfect cryptocurrency exchange, log in and start trading immediately!
However, keep in mind that every good strategy requires patience and discipline. It all comes down to understanding how the market works and making good trades if you’re looking to make money with cryptocurrency trading.
Go ahead and get started now!